CAIRO: Subsidization should be reconsidered no matter the criticism, Prime Minister Ibrahim Mahlab said, condemning “supporting the rich at the expense of the poor,” and vowing “to protect the poor” before taking steps regarding subsidies, according to a Cabinet statement late Thursday.
Mahlab arrived Thursday morning in N’Djamena, the capital of Chad, to begin his two-day African tour, which also includes a visit to Tanzania.This tour represents Mahlab’s first foreign visit to other African countries since he took office in March.
Mahlab said, in a statement upon his arrival, that he will also emphasize the need for reinstating Egypt’s membership in the African Union, which was suspended on July 5 in reaction to the overthrow of former president Mohamed Morsi, Youm7 reported.
“The government is working hard to protect the poor before realizing any steps in the subsidy system,” said Mahlab in a meeting with the Egyptian community in Chad.
Raising natural gas prices for homes is a step in this direction (amending the subsidy system), since the majority of lower-income people have no gas at their homes, he added.
Mahlab further explained that gas prices for homes have been raised to equal the price of a butane cylinder, which is sold at approximately 12 EGP. “Lifting gas prices will save 1 billion EGP, and this revenue will be redirected to infrastructure.”
“Approximately 27 percent of Egypt’s budget is allocated for fuel subsidies (150 billion EGP annually), and 25 percent for wages and 25 percent for paying off interests and debts, while investment obtains only 23 percent,” Mahlab added.
Egypt’s budget deficit will reach 14 percent in the fiscal year 2014/15 if economic reforms are not applied, but the deficit may fall to 10 percent in the casethat they are applied, Minister of Finance Hany Kadry said during a Cabinet meeting earlier this week.
Egypt has experienced dramatic economic challenges since the ouster of former President Hosni Mubarak in the wake of the January 25 Revolution, with a deficit of 240 billion EGP ($34.3 billion) during the fiscal year 2012/2013.
Kadry explained that the government has taken into account increasing expenditure on health and education for up to 140 billion EGP annually for three successive years, Al-Ahram reported.
The 2014 Constitution obligates the government to increase spending on health, education and scientific research to 10 percent of the country’s gross national product (GNP) within three years.
Mahlab said, in a press statement upon his arrival, that his visit to Chad is very important, as a first step in his tour to other African countries.
“Chad has important relations with Egypt,” said Mahlab, adding that he will deliver a message from Interim President Adly Mansour to his Chadian counterpart, reported Youm7. Mahlab will meet his counterpart and Chadian president Idriss Deby on Friday.
He added that the visit will include bilateral talks in the fields of agriculture, agricultural research and livestock, in addition to projects related to housing.
The Ministers of Housing and Agriculture and the Deputy Foreign Minister for African Affairsaccompanied Mahlab during his trip.
Additional reporting by Hend Mokhtar.